AI Data Insight
In the latest Q3 data, Japan's average monthly real household spending decreased by 3.0% YoY. Although this marks a slight narrowing from the previous 3.3% decline and is better than market expectations, it still fails to conceal consumption fatigue. Even though nominal wages have hit recent highs, high inflation and a weak yen continue to erode the public's purchasing power, leading to a persistent contraction in spending components such as food and utilities. Whether the positive growth in real wages can be effectively transmitted to terminal consumption in the future will be key to the Bank of Japan's subsequent pace of interest rate hikes.